In Apple's (NASDAQ:AAPL) most recent quarter, revenue in Greater China, which includes China, Hong Kong, and Taiwan, was down 12% year over year. With the operating segment accounting for about 21% of Apple's total revenue, it's no surprise some investors are concerned with Apple's performance in the market. After all, this is a far cry from the segment's high growth in the past. In the first quarter of 2016, Greater China revenue increased 14% year over year, growing faster than any other market. And looking even further back, Greater China revenue skyrocketed 70% year over year in the first quarter of 2015.
Has Apple's market opportunity in China come to a sudden halt or -- even worse -- begun to retract? I don't think so. Here are five reasons Apple's China business is still thriving.
1. Revenue was flat year over year in Mainland China during Q1. So China is faring better than Apple's overall Greater China operating segment. However, even this understates how Apple is doing in China. Adjusting for currency headwinds, Apple's revenue in the market was up 6%. Finally, investors should realize that Apple was up against a tough comparison; its year-ago quarterly China revenue was an all-time record for the company.
2. Unit Mac sales in China grew by a double-digit percentage in Q1. The only other markets that achieved year-over-year double-digit percentage growth during the quarter were Japan, India, the Netherlands, Sweden, and the U.S. education market. As Apple's most expensive products, Macs deeply entrench customers into the Apple ecosystem and can lead to follow-up purchases in the future. Overall Mac unit sales increased just 1% during the quarter.
3. iPad unit sales also posted double-digit growth in China during Q1. This crushed Apple's overall 19% year-over-year decline in iPad units for all of its operating segments combined during the quarter. The only other market with similarly robust growth in iPad unit sales was India.
4. 50% of iPhone sales in China were to switchers and first-time buyers. Apple CEO Tim Cook said this "is a very high number that we're pleased with." More switchers and first-time buyers mean that Apple is growing its installed base of users, which management hopes to further monetize with repeat purchases, app sales, and services.
5. In 2016, Apple's App Store revenue soared 90%, the company said in a Jan. 5 press release. To give the significance of Apple's App Store revenue in China some more context, quarterly App Store revenue in China surpassed the U.S. by over 15% during the third quarter of last year, according to estimates by App Annie. This makes China Apple's largest market for its App store.
Clearly, China is still critical to Apple's business. And based on these figures, it looks like the market may still have more room to run. Sure, tough comparisons throughout 2017 may make growth in Apple's overall Greater China segment difficult. But a strong trajectory for sales in China across multiple product segments suggests the country could help Apple's Greater China segment return to growth in the future.